G7 and European leaders are increasingly aware they are losing influence in the global south. This is not new, but it has recently built up a head of steam.
In both public and private meetings at the UN General Assembly in September, leaders from the global south made clear their unhappiness with the way in which European countries have stepped back from their role as custodians of the multilateral system, provided insufficient support during the covid-19 pandemic, and made a litany of promises that remain unfulfilled – particularly on climate change. Southern leaders believe that their countries are victim to problems created in and by other regions: the global financial crisis started in the US housing market; covid began in China; Russia’s invasion of Ukraine contributed to global food and energy crises; and industrialised countries in the global north created the climate emergency. (Africa has contributed just 4 per cent to historical carbon emissions.)
The world’s southern countries are facing immense challenges. In October, the IMF published what is perhaps its bleakest economic outlook in a decade. Not since the global financial crisis have we seen such pressure on vulnerable countries. A total of 1.5 billion people live in countries that Bloomberg ranks as the top 25 most vulnerable to debt distress. And while the United Nations’ food price index has fallen from all-time highs in the immediate wake of Russia’s invasion of Ukraine, food prices remain higher than the previous crises in 2008 and 2010. International investors have pulled $70 billion from emerging market bond funds in 2022, making finance more costly and harder to come by. As a result, analysts are warning of a “historic cascade of defaults.”
G7 and European countries have not only failed to address these crises, they have actually made them worse in many southern countries. On covid-19, richer countries monopolised vaccine supplies; on climate change, African decision-makers worry that efforts to accelerate decarbonisation will impinge on economic and social development; the response to the cost of living crisis – in the form of raised interest rates in G7 countries – is exacerbating food insecurity and increasing debt distress.
And in terms of what Europeans are actually doing to help developing countries, the disconnect is stark between how Europe thinks it is perceived and how it is actually perceived. A recent study shows that, in many cases, the role of Europe’s development programming remains invisible in comparison to China’s inescapably noticeable infrastructure projects. Meanwhile, steps by the EU to use market access to enforce human rights and environmental standards, viewed at home as a positive impact of Europe in the world, are perceived elsewhere as simple market protectionism.
This disconnect has its roots in a desire in the global south for agency and self-determination. Instead of being recipients of aid programmes, countries want a genuine seat at the tables where decisions are made. This desire is perhaps most acute when it comes to the governance of the Bretton Woods institutions – the International Monetary Fund and World Bank, which were established in 1944 to safeguard the stability of the international financial system and finance postwar reconstruction. By ‘gentleman’s agreement’, Europe gets to choose the managing director of the IMF and the United States selects the World Bank president. The voting shares of these institutions are highly unequal. For example, the euro area with a population of 342 million people controls roughly 20 per cent of the voting power at World Bank, while Africa’s 54 countries – accounting for 1.4 billion people – collectively have a voting share of roughly 7 per cent.
A call for structural reform
Countries in the global south are increasingly calling for specific responses to these crises and change in how the responses are shaped and governed.
In April, following Russia’s invasion of Ukraine, African finance ministers proposed a set of measures to create fiscal space to help them respond to the knock-on effects of the war. Barbados prime minister Mia Mottley has tabled a new agenda for action, the Bridgetown Initiative, which seeks to address immediate fiscal concerns and increase vulnerable countries’ resilience to shocks.
In July, Senegal’s president and African Union chair, Macky Sall, called for an African Union seat at the G20. Indian foreign minister, Dr S Jaishankar used his UN General Assembly Speech to describe the current architecture of the Bretton Woods institutions as “anachronistic and ineffective … deeply unfair, denying entire continents and regions a voice in a forum that deliberates their future.” UN secretary general Antonio Guterres has described it as “morally bankrupt.”
A number of G7 countries have responded positively to such calls. US president Joe Biden has signalled his support for reform of the UN Security Council and Japan has backed a proposal for a permanent African seat.
But Europe has been notably absent. In fact, many African governments see it as preaching about democracy and rule of law when it comes to nation states but remaining sanguine about a democratic deficit in international institutions. The perceived hypocrisy is further augmented when Europe is happy to cooperate with autocratic states when it suits Europe’s security, energy, and economic interests.
How to address this
Firstly, European leaders should show that their promises can be trusted. This means making good on their existing promises to provide emergency liquidity in the form of $100 billion special drawing rights delivered via the IMF and through multilateral development banks. They should fulfil the pledge to deliver $100 billion in climate finance back in 2009. And they should provide these funds quickly and without imposing harmful policy conditionalities.
Secondly, European leaders should champion a permanent G20 seat for the African Union ahead of the G20 leaders’ summit in November. They should then support broader efforts in 2023 to rebalance the lack of African representation on the boards of the IMF and World Bank, and on the UN Security Council.
Finally, European executive directors of the World Bank and other multilateral development banks should use their influence to push these institutions to more effectively leverage their balance sheets. A G20 expert group has laid out recommendations that could leverage up to an additional $1 trillion for climate and development finance. The US, the United Kingdom, and a number of other G20 countries are already supportive.
Taking these specific steps would signal that European countries are listening to African countries and willing to provide urgent finance at a scale needed during an era of polycrisis. This could help build the trust necessary to catalyse a broader debate about the kinds of international institutions needed in the twenty-first century.
David McNair is a member of the ECFR Council, executive director for global policy at the ONE Campaign, and a non-resident scholar at the Carnegie Endowment for International Peace.
The European Council on Foreign Relations does not take collective positions. ECFR publications only represent the views of their individual authors.